Pakistan Ministry of Textile officials believe that although Britain has announced exit from the EU, it will have zero or nominal impact on Pakistan’s textile exports as British Prime Minister will step down in October, and from October it will take another two years to complete the process, the actual process will be long.

They are hopeful that in around two and half years time Pakistan will find some way to have a free trade agreement with Britain, same like EU.

Britain will have to honor certain ongoing agreements under its new regime as it would be in favour of Britain to sign new contracts with Pakistan and Bangladesh in textiles, leather and other sectors, official said.

However, there could be some immediate impact due to weakening Pound Sterling and Euro. With the weakening pound and Euro against dollar, Pakistani textile exporters may face immediate losses.

The pound sterling and Euro saw a decline of 2.3 percent in a single day when Britain announced the exit.

The people of Britain voted for a British exit, or Brexit, from the EU in a historic referendum on Thursday June 23.

At present Pakistani exports to EU stand at around 4.5 billion dollars. While the exports to Britain are 1.3 billion dollars, around 26 percent of total textile exports to EU, according to official data.

The EU signed a law in late 2013 granting Pakistan a special status called GSP-Plus, zeroing tax on certain categories of goods exported to the 27-nation bloc for 10 years. As per official data, Pakistan’s exports to the EU increased by $1.08 billion during the period January to October 2014 as compared to the same period in 2013.

Exports to the EU, during January-October 2014, remained $6.38 billion, up by just over 20 per cent from the $5.3 billion recorded in the corresponding period in 2013.

Before GSP-Plus, textile exports faced customs tariffs of between 6.4 and 12 per cent and leather goods and footwear up to six per cent. EU accounts for 25 percent of Pakistan’s exports and 10 percent of imports. For last two years, the textile imports have been facing multiple challenges due to lack of pertinent policies and other challenges.

But with textile sector already under performing, many believe that despite optimism of government, in the rapidly changing international export market scenario, Pakistan textile sector needs coordinated efforts of ministry of Finance, Ministry of Commerce, and Ministry of textiles to formulate new policies.

Pakistan is exporting mainly textiles and leather products to EU and imported mechanical and electrical machinery, chemical and pharmaceutical products.